Question 2. ABC Company supplies schools with floor mattresses to use in physical education classes. ABC has received a special order from a large school district to buy 600 mats at $45 each. Acceptance of the special order will not affect fixed costs but will result in $1,200 of shipping costs. For the first 6 months of 2016, the company reported the following operating results while operating at 80% capacity: Sales (100,000 units) Cost of goods sold Gross profit Operating expenses $7,000,000 4,200,000 2,800,000 2,000,000 $800,000 Net income Cost of goods sold was 75% variable and 25% fixed; operating expenses were 70% variable and 30% fixed. Instructions (a) Prepare an incremental analysis for the special order. (b) Should ABC Company accept the special order? Justify your answer.

Question 2. ABC Company supplies schools with floor mattresses to use in physical education classes. ABC has received a special order from a large school district to buy 600 mats at $45 each. Acceptance of the special order will not affect fixed costs but will result in $1,200 of shipping costs. For the first 6 months of 2016, the company reported the following operating results while operating at 80% capacity: Sales (100,000 units) Cost of goods sold Gross profit Operating expenses $7,000,000 4,200,000 2,800,000 2,000,000 $800,000 Net income Cost of goods sold was 75% variable and 25% fixed; operating expenses were 70% variable and 30% fixed. Instructions (a) Prepare an incremental analysis for the special order. (b) Should ABC Company accept the special order? Justify your answer.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

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